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UnitedHealth Group said David Wichmann, current company president, will succeed longtime CEO Stephen Hemsley as the top executive of the nation’s largest health insurer, effective Sept. 1, the company announced Wednesday.
After more than a decade as CEO, the 65-year-old Hemsley will step down from the top job into a role as executive chairman of the company’s board, ensuring continuity for UnitedHealth, which has been on a roll in recent years. Its Medicare Advantage business has grown rapidly along with other lines including its Optum health services business, which have helped UnitedHealth become a healthcare powerhouse largely created under Hemsley's leadership.
“This is the right time for this transition to take place, as the company is performing strongly and has a positive outlook for the forseeable future, and Dave Wichmann is the right choice to succeed as CEO for that future," Hemsley said in a company statement. "With nearly 20 years of service to the company, Dave has the business and leadership skills, enterprise knowledge and support, broad health care experience, and deep expertise in areas that are critical to our future – especially growth-oriented technology, operations and global markets. He is the right person to lead UnitedHealth Group through the continuing evolution of health care."
Hemsley leaves UnitedHealth on top of its industry. UnitedHealth this year is projected to eclipse $200 billion in annual revenues despite withdrawing from individual insurance products from public exchanges under the Affordable Care Act. Though UnitedHealth was unable to make a successful run in the Obamacare business, the company's other operations related to the ACA have done well such as managing Medicaid for states that expanded under the law.
UnitedHealth has also capitalized on the ACA's reforms to Medicare Advantage, which now includes star ratings for plans that provide higher quality. Revenue in UnitedHealth’s Medicare business jumped 17%, or $2.5 billion, to $16.7 billion in the second quarter.
UnitedHealth's executive suite transition isn’t a complete surprise. Wichmann became president and joined the “office of the CEO” in 2014 when he became head of all of UnitedHealthcare’s domestic and international businesses.
At that time, some company observers saw Wichmann as being placed in a horse race to succeed Hemsley with fellow executive Larry Renfro, who is CEO of UnitedHealth's Optum unit. But the company never acknowledged that Renfro, who is 63 years old, was in line to succeed Hemsley.
Wichmann, who is 54 years old, has been with UnitedHealth Group for almost two decades and was chief financial office from 2011 until mid-2016. “Helping to guide this enterprise, with its extraordinary people, purpose and capabilities, is a distinct yet humbling honor,” Wichmann said.
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“We are fortunate to have an exceptional organization, a deep and talented leadership team,
and highly dedicated people," Wichmann said. "Health care will continue to change, but this is an enterprise built for change: innovative, adaptable and consumer-centric.”
Early reaction Wednesday morning from Wall Street was positive.
"Wichmann has clearly been positioned as CEO successor, and this news is not surprising to the investment community though the timing is sooner than anticipated," Leerink's Ana Gupte said. "Mr. Wichmann brings 20 years of experience with UNH and has not only served as President, but also as the CFO, and led operations, technology and M&A for the company."
